To ensure an equitable and fair redistribution of a tax levy – so that all property owners share the tax burden of the town equally – a town-wide revaluation is often undertaken.
Every real property must be assessed by the same standards of value in New Jersey and must be assessed for taxation according to general laws. Market value is the basis for establishing every property’s fair share.
Many properties, however, do not correspond to their assessed value because their market value was assigned during the last property revaluation — which in many cases occurred decades ago.
Changes on the real estate market make it impossible for a property to maintain the exact same value. New housing is continuously being built and commercial properties that influence the values are also being constructed. Tearing down dilapidated structures and replacing or rehabilitating old homes cause prices to fluctuate. Some houses may seem to have not changed over the years from the outside, but on the inside they may be deteriorated or renovated.
When we compare the market value assessed in past years with the current market value, we can see that many properties in New Jersey’s towns are substantially out of line with the average market value for a majority of homes.
As a result, many properties are underassessed, which means that they do not reflect the accurate value of the property in the current market. Such property owners are therefore not paying their proper share of taxes. To compensate, this means other property owners must pay extra tax. Someone who has bought an old house and renovated it when the real estate market was at its peak may now be paying more than their fair share since the estate market has collapsed.
What scares people is thinking that a property revaluation automatically means an increase in taxes for all properties. State law though mandates that property revaluations assess all properties of a municipality to 100 % of their market value to ensure everyone is paying their fair share of the tax burden.
The general rule is that one third of revaluated properties will see no change in their tax burden, one third will see this burden go down and the last third will experience a raise.
The goals of revaluation are fairness and equity. For the underassessed, though, correcting the imbalance might not be welcome.
“I hate to say I told you so, but I told you so,” summed up Mayor Sandy Moscaritolo's reaction to the news about the River Edge reassessment results. Out of the 83-page report the majority of homes will see a reduction in their assessed value but at the same time those residents seeing an increase ranging from 16% to 109%.
“The reassessment was a bad idea,” Moscaritolo said. “It's a shell game to move numbers around and its opened a can of worms. Residents who had newer construction homes, did work or made improvements will bear the brunt of the reassessment. I have two words for you 'tax appeal.'”